POSTSCRIPT / July 2, 2002 / Tuesday


Philippine STAR Columnist

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5% of water bill goes to French consultants?

ROLLING BACK THE TIDE: Malacanang has its hands full holding back rate increases in electricity, water and other items. But it looks like temporary relief, like an ugly tide merely ebbing as we look on helplessly….

Bowing to pressure from the Palace, various agencies/firms concerned have disallowed or suspended the proposed increases in electricity rates, the cost of water and the toll at the Skyway system of the Manila South Tollway.

The more accurate term is actually “postponed” since Malacanang is obviously just buying time to be able to regain its bearing in the face of the sliding popularity of President Gloria Macapagal Arroyo.

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EVERYTHING ON HOLD: In the case of electricity, the Energy Regulatory Commission has disapproved the unbundled rate increases proposed by the National Power Corp. (Napocor). The ERC is supposed to be independent, but one can never underestimate the persuasive power of the President.

As for water, the personalities involved were called to Malacanang days ago and emerged with long faces and the wan announcement that the water rate increases supposed to take effect yesterday had been held in abeyance.

The Skyway toll increases for the Makati-Filinvest/Alabang segment of the Manila South Tollway were also supposed to take effect yesterday, but Malacanang prevailed upon the operators to first conduct an “information campaign” until July 15 before raising the toll. Much like telling the executioner to read the doomed man a good bedtime story before putting him to sleep.

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ROOT CAUSES IGNORED: We’re not talking yet of the increases in fare, tuition, medicine, atbp. Note also that we’re no longer mentioning how much are the proposed increases. We’ve grown tired keeping track. Feeling defeated, we just wait for the inevitable to hit our gut, then we come out screaming maybe.

You know why the experts in government cannot stop or scale down the rate increases? One reason is that they do not bother to go to the root causes. They grapple with the monster as it appears to them without bothering with who or what is behind it.

Also, they are afraid to displease privileged sectors pushing the rate increases. Aside from that, there is no political will to go after the big-time grafters whose commissions that had bloated project costs are being passed on to the public.

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FEELING RESIGNED: We sense a feeling of helplessness among fellow Filipinos. It seems we’ve been abandoned to the vultures. No wonder one out of every five Filipinos wants to emigrate, if only he could, according to surveys.

Why not mention the remaining four, the President might chide us. Well, let’s mention the other four. Knowing they are trapped, the other four just won’t talk about their escape plans. There, we’ve mentioned them.

If we had land borders like our neighbors in Indochina, this country would be depopulated by 60 percent in one year even if they dug up a Grand Canyon around us.

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EQUITY EARNED BACK: Back at the Manila Waterworks and Sewerage System (MWSS), which has turned over its multibillion-peso water business to the Ayalas and the Lopezes, it’s status quo for consumers after Malacanang told everybody not to raise water rates.

Meantime, may we suggest that everybody look into the wisdom of some moves of the French partners of the Lopezes in Maynilad Water?

After taking key positions in 1997 despite their minority (40-percent) shareholding, the Frenchmen merrily kept bringing in equipment that Maynilad needed — generators, water meters, pumps, etc.

Those in the business calculate that by procuring the gear themselves, the French must have recovered by now the 40-percent equity (P2.096 billion) that they have put into their partnership with the Lopezes (Benpres).

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MILLIONAIRE CONSULTANTS: Not happy with that, Ondeo Services (the local French firm) is now reportedly bringing in 48 French consultants to beef up the five expats that they have now. They used to have more than 10.

Although they are doing work that Filipino executives and professionals can do more competently and at less expense to the company, the French consultants receive fees of not less than P1 million a month each. That’s a lot of water!

In fiscal year 2001 alone, 11 French consultants collected a whopping P168 million for work that was mostly done by their Filipino staff. Of this amount, P110 million was for consultancy.

Unlike other professionals whose fees are taxed a standard 10 percent at source, the tax withheld from these consultants was only 5 percent. Why the special treatment?

Before extorting rate increases from consumers, maybe MWSS can crack down on this abuse. We don’t need 48 French consultants to tell us how to collect, process and distribute water. And we don’t need to pay them more than P1 million each per month.

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EXPATS BLOAT WATER BILL: In fact, the 5-percent tax is being questioned by some specialists at the Bureau of Internal Revenue who say that the fees should be regarded as royalties subject to a final tax of 20 percent.

They explain that the shareholders agreement with the French involves training and the protection of intellectual property rights related to technical knowhow. On this basis, they point out, the fee paid to the foreign consultants can be construed as payment of royalty.

Ondeo’s billings amounting to P168 million for 2001 is 5.45 percent of revenues for that year. In effect, for every one peso paid by consumers and other parties, 5.45 centavos go to high-living Frenchmen dipping their fingers into Maynilad waters.

This is one of the reasons why water service is getting to be expensive. Maynilad and MWSS may want to cut costs and improve efficiency by limiting the number of foreign consultants living off poor consumers in Maynilad’s franchise area.

Unless, of course, Malacanang and the Lopezes are afraid to displease the French.

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FULL FRENCH CONTROL: Incidentally, another Frenchman has arrived to lord it over as president and chief executive of Ondeo. Nothing unusual, except that this French expat will operate as a co-president of Maynilad. Why, is the water firm’s president, Rafael Alunan III, not up to the job?

Such meddling of the minority shareholder is not confined to the top post. Maynilad’s operations chief and the chief of the non-revenue water department are also Frenchmen by the name of T. Krieg and T. Schock, respectively. Why are we second class in our own territory?

Now you know what costly items, aside from lost water, go into your bill — if you’re in the Maynilad’s half of the MWSS service area.

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COUPLE IN ‘CONFLICT’ CASE: Talking of intellectual property, we came across this interesting conflict of interest case of a top executive of the AMA Group of Companies and his wife being sued for putting up businesses that allegedly compete with AMA.

Agnes Eugenio-Abad, wife of resigned AMA executive vice president Manuel F. Abad, has to explain that her firms — Asian Institute of Health Care Inc. and Access Professional Nursing Care Center Inc. — did not pose unfair competition and constitute conflict of interest when she put them up while her husband was still on the AMA payroll.

“AIHC is in the business of providing nursing care services for old and terminally ill patients and undertakes specialized training for nursing aids and caregivers,” she said in a statement. “We are not in the business of computer training, and AMA is not in the same line of business.

But AMA said that the Abad couple formed the training and educational institutions while the husband was still in the employ of AMA. And AMA said in its brief that it also has medical courses in its curriculum, resulting in conflict of interest that violates company policies and Manuel’s non-disclosure agreement with AMA.

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ADMINISTRATIVE: We had the rejoinder of Gene Reyes, president of the Concerned Citizens of Romblon, to the comment of the Department of Environment and Natural Resources on the public outcry over the Petron bulk plant in a residential-tourism-commercial shoretown of Romblon, but we forwarded it to the Editor for possible use in the letters section.

We will print on Thursday the results of our survey of readers’ opinion on the question: “Do you think Abu Sayyaf leader/spokesman Abu Sabaya is dead or alive? You can still rush until tomorrow your own response if you want to catch the last count.

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(First published in the Philippine STAR of July 2, 2002)

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